Three weeks of rehearsal, in a large hall, on New York City's Lower East Side, preceded the start of principal photography on November 14, 1988. It had been Sidney Lumet's practice since his work in the early days of live television to factor a lengthy rehearsal period into the production schedule of all his movies. Dustin Hoffman commented: "In a sense, you've killed the first three weeks with most movies because it usually takes that long before people start letting others into their lives. At the start of any film there is a kind of barrier separating the actors. The way Sidney works, with a lengthy rehearsal time prior to the production, you're at a place when you start shooting that you wouldn't be in most other pictures until you were halfway through them". Sidney Lumet said: "One of the reasons for my vaunted speed is because of the rehearsals. It's an irreplaceable process for me, a process of discovery, a process of getting to know the actors. When we get on the set, an awful lot has already been locked into place for us".
The New York City locations featured in the film included cramped West Side apartments, midtown taverns, a neighborhood funeral parlor, police precincts, and courtrooms. Production trucks and equipment moved efficiently from one end of the city to another, despite streets crowded with shoppers and tourists over the Thanksgiving and Christmas holidays.
Producer Lawrence Gordon described this picture by saying: "Family Business (1989) is basically a rites-of-passage story. It's about a young man, Adam, who has reached an age where he's ready to establish his own identity and how his father deals with that. It's also about his father's grappling with his relationship with his own dad. He wants to do all he can to protect his son from what he rightly perceives as the dangerous influence of his old man. He doesn't see what appeals to Adam about him - the freedom, the self-assurance. To see that, he has to look more closely at his shortcomings as a father, and that's a very difficult and painful thing".
The production notes for this picture stated that Sidney Lumet benefited from a core group of crew members, with whom he tries to work, whenever possible. Lumet said: "Working with familiar crews, I have my own shorthand. They're used to my tempo and I'm used to theirs. It's enormously helpful".
Dustin Hoffman said of Sidney Lumet: "Sidney knows the medium so well. It's like sitting in the back of a jet plane with a pilot who's flown a lot of missions. He tends to go faster, and that makes it scarier. But, in another sense, it's very exciting". And of his character Vito, Hoffman said he "is a father fighting with his own father, over the direction his son will take with his life".
The casting process began with Matthew Broderick. Sidney Lumet said: "I went to Matthew first. I asked him to come along with the film, even though his part hadn't been fleshed out. He was somebody I had wanted to work with, and, thank God, he went on my word, and we did flesh out the role".
Sean Connery said of this film: "It's a tale of generations. I had some initial reservations, about playing the part of someone who was originally supposed to be quite a bit older, doing all these extraordinary things. But we resolved the age issue early on, and I had complete confidence that Sidney could make the yarn work".
Sidney Lumet and Lawrence Gordon agreed that without Sean Connery playing the grandfather, the project might never have gotten off the ground. Gordon recalled: "Sean was the key. We knew the story turned on the charm and appeal of the grandfather. Face it, a man who is encouraging his grandson to take up a life of crime, is not, on the surface, an easy guy to like. We needed someone irresistibly charismatic, so the audience would believe that a very bright young man might perceive him as a romantic role model".
The name of Dustin Hoffman's character was "Vito', which was arguably a nod to crime boss Don Vito Corleone, from The Godfather (1972) and The Godfather: Part II (1974). This was perhaps a deliberate piece of irony, as the middle male of the three McMullen family members, Vito was the only one who was not criminally minded. Matthew Broderick would soon co-star with Marlon Brando, who had played Vito Corleone in The Godfather (1972), in The Freshman (1990), where Brando engaged in a self-parody of his Vito Corleone characterization, which had won him a Best Actor Academy Award for The Godfather (1972).
First movie role in a theatrical feature film that Dustin Hoffman appeared in since he had won the Best Actor Academy Award for Rain Man (1988). Family Business (1989) premiered in late 1989, with Hoffman receiving his second Oscar earlier that year. Hoffman's first Oscar had also been for Best Actor, for Kramer vs. Kramer (1979) about a decade earlier, the picture also having a kinship natured title, like Family Business (1989).
Vincent Patrick, who wrote the screenplay based upon his novel of the same name, got the idea for the story when, as a new grandfather, he noted personality traits in his grandchild that had apparently passed over his own son. Patrick said: "I thought it would be fascinating to do a story about a grandfather, who had been a lifelong criminal, having a son who turns out not to be one, and a grandson who seems to have inherited some of the grandfather's criminal genes. The grandfather and grandson then put the father, who is the middleman of the drama, into a terrible dilemma".
Sidney Lumet said of this movie: "I'm interested in the interactions of individuals and their social systems. I enjoy dealing with characters, who at one point, have lived outside of the moral code of conventional society. I'm also intrigued by family relationships, dynamics between fathers and sons, mothers and sons, fathers and daughters, mothers and daughters. The whole familial structure is endlessly fascinating".
Approximately one week of the production was shot outside New York City. Those locations included a courthouse in Jersey City, a shopping mall in Spring Valley, and an office complex in Jericho, Long Island. A few additional days of studio work were needed for some of the interiors as well.
Sean Connery had won one Academy Award, and Dustin Hoffman had won two Academy Awards, but despite this, and the latter having being nominated more times as well, six times compared to once at the time of the film's release, Connery was top (first) billed and Hoffman received second billing. The order of billing was likely based on seniority of experience, and in descending age order of the three generations of the patriarchy, as Matthew Broderick was third billed.